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Is An 850 Credit Score Possible?

College students dream of the perfect GPA. Newlyweds might dream of the perfect house in the perfect neighborhood to start a family. But as Money magazine reports, Chris Peplinski, a 37-year-old stay-at-home dad, dreams of the perfect credit score.

Weighing in with an 813 score, already better than 82 percent of Americans, Peplinski won’t rest until he’s hit 850, the elusive perfect credit score held by only 1 out of 200 Americans. How is he working to reach his goal? Here are a few ways he’s trying to boost his score:

Reads up on every factor that contributes to the FICO score

Checks his credit score every three months

Takes out a car loan to add to his credit mix, even though he could afford to pay cash

But the truth is that there’s no clear-cut way to achieve an 850. Nevertheless, the higher your score, the greater your savings. It’s one of the big savings tips that can affect how much you pay on virtually every loan for which you’re approved.

Why your score matters

A high credit score means keeping more cash in your savings account over your lifetime. High scores mean getting better rates on loans and avoiding other fees, deposits and penalties. Think it sounds like small change? Think again. As MONEY reports, a $300,000 30-year fixed-rate mortgage is $14,200 less for top-tier borrowers than for second-tier borrowers, and $25,600 less than for those two tiers below.

The following five factors determine your credit score:

Payment history

Amount you owe on credit lines and loans

Length of your credit history

Amount of new credit you are applying for

Types of accounts you hold

What isn’t known for sure is how many points you’ll lose by missing a payment — or how many you could gain by taking out a car loan, which is why there’s no guaranteed way to hit 850. But one thing is certain: payment history matters most.

Easy ways to boost your score

Make sure you pay all bills on time to bring up your credit score, and while you’re at it, check your utilization ratio, the amount you owe compared with the amount of available credit. A low utilization ratio means a higher credit score. If you’re currently in debt, missing payments, or have a high ratio, focus on strategies to reduce your debt, perhaps starting with a debt snowball.

High credit score holders also keep an eye on their credit mix, which is why Peplinski saw a 15-point increase after taking out the car loan he didn’t need. A mix of mortgage, credit cards, and auto loans yields a higher score.

Worrying about the perfect score isn’t for everyone, but working your way towards the top tier is worthwhile. The better your score, the better your chances of saving real money in interest payments.

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